The cost of not using renewable energy

A clever new study [PDF] from the World Future Council attempts to do something I haven’t seen before: quantify the cost of not using renewables.

The idea is pretty simple. When we use finite fossil fuels to generate energy, rather than the inexhaustible, renewable alternatives, we make those fossil fuels unavailable for non-energetic uses (think petrochemicals) in the future. In other words, when we burn fossil fuels for energy, we are needlessly destroying valuable industrial capital stock.

You can read the paper for more on methodology and assumptions. The paper uses current market values for fossil fuels rather than attempting to predict future prices, so the estimates are likely conservative.

Here’s the conclusion:

Protecting the use of increasingly valuable fossil raw materials for the future is possible by substituting these materials with renewables. Every day that this is delayed and fossil raw materials are consumed as one-time energy creates a future usage loss of between 8.8 and 9.3 billion US Dollars. Not just the current cost of various renewable energies, but also the costs of not using them need to be taken into account. [my emphasis]

Got that? Every day we use fossil fuels for energy, we steal $9 billion from future people who will need those fossil fuels for non-substitutable industrial uses.

The exact numbers here are, like numbers in all economic modeling, probably going to turn out to be wrong. My guess is they are on the low end, but there are so many assumptions required that, really, who knows.

The paper does highlight an important conceptual point, though. Discussion about shifting to clean energy (or regenerative agriculture, or sustainable urbanism, etc.) tends to be dominated by the costs of changing. But the choice is not costs or no costs: the status quo carries costs too. Every day we stick with the status quo, we are increasing the costs our descendants will pay for the inevitable, unavoidable transitions to more sustainable systems. (Relatedly: the cost of reducing carbon emissions enough to avoid catastrophic warming rises every year.)

The question is not costs or no costs, but about the balance of costs and benefits, and perhaps more importantly, who pays the costs and who receives the benefits. Right now we are imposing huge and growing costs are our descendants in exchange for temporary, unsustainable benefits today. That is the farthest thing from “fiscal conservatism.”